Control Risks’ advice to clients is always that corruption never pays.
The new UK Bribery Act will prove to be good news for UK businesses according to the risk consultancy Control Risks. The Act – the biggest change in UK bribery regulation in over 100 years – features a new offence of corporate failure to prevent bribery, requiring all UK companies to implement ‘adequate procedures’ to counteract corrupt practices in their operations, and makes it easier for prosecutors to build cases against companies and individual executives involved in corruption.
‘I think most well-managed businesses recognise this new legislation was severely overdue’ says John Bray, Director of Control Risks’ anti-corruption services. ‘Whilst there will be short term pain for some companies who need to update their anti-corruption measures quickly, the law helps bring about a more level playing field and provides additional protection for individuals when they are faced with demands to pay bribes.’
Control Risks has seen a spike in enquiries over the last year from clients asking for support to revise their compliance procedures in anticipation of the new law. Demand is especially strong from organisations operating in those emerging countries where paying bribes may simply be seen as a cost of doing business. Whilst emerging markets often offer the most exciting growth prospects, many lag well behind when it comes to their efforts at countering corruption. Further, the complexity of modern business structures means that often these investments involve multiple Joint Ventures incorporating host governments and local partners. No country authorises bribery, but in many cases anti-corruption laws and enforcement are badly out of date or ambiguous, strengthening the hand of corrupt officials. In a recent client survey, Control Risks found that almost half of all companies had turned down an otherwise attractive business opportunity on account of a country’s reputation for corruption.
The concern for organisations is how they can navigate this complexity to run a successful business in jurisdictions where their unwillingness to pay bribes or facilitation payments may mean frustrating delays, increased costs and even lost business.
‘Paying bribes is not only ethically unsound, but it also doesn’t make sense from a business perspective either,’ says Bray. ‘Conducting business in this way poses an enormous risk to corporate reputation and now companies also face the risk of punitive fines and even prison for senior executives. Additionally, more often than not, it only exacerbates the problem with demands for more, and larger, bribes.’
